RNS Number:0818R
Norwood Immunology Ld
31 March 2008
FOR IMMEDIATE RELEASE 31 MARCH 2008
NORWOOD IMMUNOLOGY LIMITED
INTERIM CONSOLIDATED RESULTS FOR THE HALF YEAR
TO 31 DECEMBER 2007
Norwood Immunology Limited ('Norwood Immunology' or 'the Group') (AIM:NIM), the
Group focused on the rejuvenation of the immune system, the development of
virosomal vaccines and the interaction between the immune system and stem cell
therapies, today announces its interim consolidated results for the half year
ended 31 December 2007.
BUSINESS HIGHLIGHTS
* The Group has finished recruiting the first 50 patients to its Phase II
US clinical trial looking at GnRH analogue Lupron Depot(R) being
administered as an adjunctive immunology therapy with an experimental
melanoma vaccine. This trial is being conducted in collaboration with The
University of Texas MD Anderson Cancer Center, of Houston. An interim
analysis of results is expected in 2008.
* The Group's Phase II US clinical trial in cancer patients undergoing
autologous (self-derived) BMT in the USA to determine whether there is
enhanced immune recovery as a result of using Norwood Immunology's
technology is progressing In order to address slower than expected
recruitment rates, the Group has been enrolling an additional five US active
trial centres. This is expected to accelerate the completion of the
recruitment process.
* The Group has completed its pre-clinical studies on a Respiratory
Syncytial virus ('RSV') vaccine candidate and it has commenced the process
to out-license the technology. RSV is a severe respiratory infection
particularly prevalent in the elderly and pre-term babies. The Group hopes
to progress this out-license process during the remainder of 2008.
* The Group is continuing to conduct a pre-clinical collaboration with a
major US partner in order to assess the potential for using its virosome
delivery technology for the delivery of SiRNA intra-cellularly. Depending on
the outcome of these pre-clinical experiments, this area of opportunity may
take on increased significance for the Group during the remainder of 2008.
* The Group is pursuing the commercial potential for stem cell-based
therapies in both the human and veterinary fields and is also exploring
related M&A and partnering opportunities. This initiative, together with the
further development of its virosomal vaccines, is expected to be an
important part of the Group's strategy going forward.
FINANCIAL HIGHLIGHTS
* As reported in the accounts for the year ended 30 June 2007, the Group
will require additional capital during 2008 to fund its operations. Norwood
Immunology is therefore actively pursuing a range of possible funding
solutions, including raising new capital, a potential sale or out-license of
technologies and/or merger and acquisition opportunities.
* As the Group does not have sufficient cash resources to fund its current
level of activities for the next 12 months, the directors have carefully
assessed the uncertainties relating to the likelihood of securing additional
funding and the Group's ability to effectively manage its cash flows. On
that basis, the directors have formed a judgement at the time of preparing
the interim financial statements that there is a reasonable expectation that
the Group can raise additional cash resources during the next 12 months and
it is therefore appropriate to prepare the financial statements on a going
concern basis.
* The Directors have re-assessed the carrying values of intangible assets
comprising Norwood Immunology IP and in-process R&D and goodwill from the
acquisition of Virosome Biologicals. The current cash position of the Group
creates uncertainty as to whether there will be adequate financial resources
in the long term to complete the development of the Norwood Immunology and
Virosome Biologicals technologies and to create future economic benefits.
The Directors therefore believe that a prudent application of Australian
IFRS leads to an impairment to the carrying value of IP, in-process R&D and
goodwill.
* This is not a negative reflection on the potential of underlying
technologies and the Directors continue to believe that there is still
potential for successful development of the goodwill, in-process R&D and
patents and still expect the recovery of a future economic benefit from its
ultimate commercialization. However, they recognise that given the financial
uncertainties it would be imprudent to continue to carry these assets on the
balance sheet. A total impairment of A$24,880,533 has been recorded in the
income statement for the 6 months to 31 December 2007 (approximately �10.9
million).
* The consolidated decrease in cash and cash equivalents for the 6 months
ended 31 December 2007 was A$2,507,035 (2006: increase of A$9,619,078),
approximately �1.1 million (2006: increase of �3.9 million).
* Cash on hand at 31 December 2007 was A$3,213,403 (2006: A$9,856,883),
approximately �1.4 million (2006: �4.0 million).
* The consolidated loss after tax for the 6 months ended 31 December 2007
was A$26,672,413 (2006: A$1,802,973), approximately �11.7 million (2006:
�0.7 million). This is after making an impairment provision to the carrying
value of intangible assets of A$24,880,533, approximately �10.9 million.
* Basic loss per share of -A$0.1168 (2006: -A$ 0.013), approximately
-�0.051 (2006: -�0.005).
Richard Williams, CEO of Norwood Immunology said: 'Given the financial position
of the Group, and the uncertainties surrounding ongoing fundraising, this is a
challenging time and the next 6 months will be a critical period for the Group
as it seeks to secure funding for the business.
However, we believe that the Group's development programs and potential
commercial opportunities within the field of immunology, vaccines and RNAi
delivery have been advanced over the last 6 months and we are pursuing some
exciting opportunities in the field of stem cells. We are focussed on securing
funding for the Group and also advancing all these activities and opportunities
during 2008.
For further information contact:
Richard Williams, Chief Executive Officer, Norwood Immunology Limited
www.norwoodimmunology.com
+44 (0)7860 295153
Lisa Baderoon, Mark Court, Mary-Jane Johnson, Buchanan Communications
+44 (0)207 466 5000
Capel Irwin, Nicholas Marren, KBC Peel Hunt Ltd
+44 (0) 207 418 8900
CHAIRMAN'S STATEMENT
COMMERCIAL DEVELOPMENT
Immunology
* The Group has two Phase II trials ongoing in the US.
* A Phase II clinical trial in collaboration with The University of Texas
MD Anderson Cancer Center, of Houston. This trial involves GnRH analogue
Lupron Depot(R) being administered as an adjunctive immunology therapy with
an experimental melanoma vaccine, to determine whether an enhanced immune
response to that vaccine can be created. The trial is expected to involve up
to 100 patients (50 treated; 50 control). The first 50 patients have now
been recruited and an interim analysis of results is expected in 2008.
* Secondly, a Phase II clinical trial in cancer patients undergoing
autologous (self-derived) BMT in the USA. The trial comprises an 80 patient
double-blind randomized Phase II clinical trial (40 treated; 40 control) The
aim is to determine whether there is enhanced immune recovery as a result of
using Norwood Immunology's technology.
* As has been previously reported, recruitment at the initial centres of
University of Texas M D Anderson Cancer Center and Dana-Farber Cancer
Institute, Harvard Medical School had been progressing slower than
anticipated. Accordingly, in conjunction with our trial partners, the Group
has been enrolling an additional five US active trial centres over the last
6 months, including Duke University, Memorial Sloane-Kettering, Washington
University, Ohio State and University of Florida. We expect this to
accelerate the completion of the recruitment process.
* The Group continues to conduct the majority of its research on the
immune system at the laboratories of its Chief Scientific Officer
(Immunology), Professor Richard Boyd, at Monash University, Melbourne,
Australia. The Group has continued its strategy of seeking collaborations
with other institutions and of applying for grants to maximise the benefit
received from the Group's sponsorship of the Boyd laboratory.
The ability to attract these grants and other collaborative interest is a
testament to the innovative research being pursued at Monash and the high regard
in which the Boyd laboratory is held by the scientific community.
Virosomal vaccines
* Virosome Biologicals' adjuvanted virosome technology is licensed to
Solvay specifically in the field of intranasal influenza vaccines. Solvay is
responsible for clinical trials and development and commercialising of the
vaccine. It successfully concluded a Phase I clinical trial in 2006. The
vaccine was found to be safe and well tolerated.
Solvay has previously advised that it intends to progress the vaccine into Phase
II clinical trials which the Group still hopes to commence in 2008. The
commencement date has been delayed compared with original expectations, a delay
which is unfortunately out of the Group's control given the trial conduct and
timetable are the responsibility of the licence partner.
* During the last 6 months we have completed our pre-clinical studies on a
Respiratory Syncytial virus ('RSV') candidate and we have commenced the
process to out-license the technology. RSV is a severe respiratory infection
particularly prevalent in the elderly and pre-term babies. We hope to
progress this process during the remainder of 2008.
* Virosome Biologicals has continued a small commercial research
laboratory in Lieden to progress its pre-clinical research development
programs including herpes strain vaccines and the use of virosomes for
efficient and efficacious delivery of SiRNA. With respect to SiRNA we are in
a pre-clinical collaboration with a major US partner to explore the use of
virosomes to delivery SiRNA interference molecules.
Other developments
* The Group has, over the past three years, devoted an increasing amount
of its Melbourne-based research activities on the interaction between the
immune system and evolving stem cell therapies. The focus of this program
recognises the importance of immunology in relation to assuring patient
acceptance of stem cell therapies. It links the Norwood Immunology
technology of re-activating the thymus with LHRH and hence rejuvenation and
manipulation of the immune system, with that of the anti-inflammatory and
tissue repair inducing properties of mesenchymal and other adult (not
embryonic) stem cells.
* This combination has many potential applications in regenerative
medicine, transplantation tolerance and treatment of cancer, autoimmunity
and AIDS. The Group is pursuing the commercial potential for such stem
cell-based therapies in both the human and veterinary fields and also
exploring related M&A and partnering opportunities. This initiative is
expected to be an important part of the Group's strategy going forward.
Financial Summary
The consolidated loss after tax for the 6 months ended 31 December 2007 was
A$26,672,413 (2006: A$1,802,973), approximately �11.7 million (2006: �0.7
million). This is after recording an impairment provision to the carrying value
of intangible assets of A$24,880,533 (approximately �10.9 million). The
consolidated negative cash flows from operations for the 6 months ended 31
December 2007 was A$2,507,035 (approximately �1.1 million). Cash at 31 December
2007 was A$3,213,403 (2006: A$9,856,883), approximately �1.4 million (2006: �4.0
million). All amounts expressed in pounds sterling have been converted, on a
proforma basis at the 31 December 2007 rate of A$1:�0.4385 (2006: A$1:�0.4031).
As reported in the accounts for the year ended 30 June 2007, the Group will
require additional capital during 2008 to fund its operations. The Group's
principal activities are still in development, either independently or in
collaboration with large pharmaceutical license partners. As such, the Group
expects to be cash absorbing until these technologies are successfully developed
and commercialised or alternative sources of revenues are identified and
developed.
Norwood Immunology is therefore currently actively pursuing a range of funding
solutions, including raising new capital, a potential sale or out-license of
technologies and/or merger and acquisition opportunities. This includes
opportunities from the commercialisation of our current technologies and
potentially from the commercial opportunities offered by our developments in
stem cell-based therapies in both the human and veterinary fields.
In parallel to the above fundraising process, the Group is continuing to
maintain a careful control of its operational costs and where possible it is
restructuring its operations to reduce its cost base and extend its cash cover.
As the Group does not have sufficient cash resources to fund its current level
of activities for the next 12 months, the Directors have carefully assessed the
uncertainties relating to the likelihood of securing additional funding and the
Group's ability to effectively manage its cash flows. On that basis, the
Directors have formed a judgement at the time of preparing the interim financial
statements that there is a reasonable expectation that the Group can raise
additional cash resources during the next 12 months and it is therefore
appropriate to prepare the financial statements on a going concern basis.
However, the Directors have re-assessed the carrying values of intangible assets
comprising Norwood Immunology IP and in-process R&D and goodwill from the
acquisition of Virosome Biologicals. The current cash position of the Group
creates uncertainty as to whether there will adequate financial resources in the
long term to complete the development of the Norwood Immunology and Virosome
Biologicals technologies and to create future economic benefits. The Directors
therefore believe that a prudent application of Australian IFRS leads to an
impairment to the carrying value of IP, in-process R&D and goodwill.
This is not a negative reflection on the potential of underlying technologies
and the Directors continue to believe that there is still potential for
successful development of the goodwill, in-process R&D and patents and still
expect the recovery of a future economic benefit from its ultimate
commercialization. However, they recognise that given the financial
uncertainties it would be imprudent to continue to carry these assets on the
balance sheet.
Accordingly, a total impairment to the carrying value of intangible assets of
A$24,880,533 has been recorded in the income statement for the 6 months to 31
December 2007, approximately �10.9 million.
Summary and Outlook
Given the financial position of the Group, and the uncertainties of the ongoing
fundraising process, the next 6 months will be a critical time for the Group.
However, we continue to be encouraged by the development and commercialisation
of our Norwood Immunology and Virosome technologies over the last 6 month and we
are also pursuing potential commercial opportunities offered by our developments
in stem cell-based therapies in both the human and veterinary fields. In
particular, we continue to be hopeful to report on interim results for the
Lupron/vaccination Phase II clinical trial in the U.S., during 2008 and also to
achieve an out-licence of Virosome Biologicals RSV program.
Finally, the Board would like to express its appreciation to all our
shareholders and staff for their continued support throughout this difficult
period.
Peter Hansen
Chairman
31 March 2008
Income Statement
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2007 2006 2007
A$ A$ A$
Revenue from ordinary activities 121,771 69,295 -
Other income/(expense) 98,047 12,930 349,554
Depreciation and amortization expense (30,085) (4,333) (23,444)
Employee benefits expense (770,670) (745,682) (1,473,436)
Finance costs (25,758) (87,373) (202,791)
Insurance (54,708) (38,015) (83,859)
Investor relations (72,816) (124,005) (230,829)
Legal costs (3,172) (54,747) (146,872)
Net foreign exchange (loss)/gain 8,064 - (245,827)
Professional fees (270,454) (74,982) (275,115)
Parent entity management fees - (60,000) (80,000)
Patent costs (138,628) - (53,946)
Travel expenses (113,275) (85,985) (268,342)
Research and development costs
immediately expensed (417,656) (555,328) (1,044,293)
Impairment of non-current assets (24,880,533) - (637,641)
Other expenses from ordinary (122,540) (54,748) (446,926)
activities
Loss before income tax expense (26,672,413) (1,802,973) (4,863,767)
Income tax expense - - -
Loss for the period attributable to
members of the Group (26,672,413) (1,802,973) (4,863,767)
Loss per share
Basic 3 (0.1168) (0.013) (0.026)
Diluted 3 (0.1168) (0.013) (0.026)
All activities derive from continuing operations.
There are no recognised gains and losses for the current financial year and
preceding financial year other than as stated in the income statement.
+-----------------------------------------------------------------------------------------+
|Balance Sheet |
| |
| |
+--------------------------------+--+-----+-----+-------------+---------------------------+
| | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| | | |Note | Unaudited| Unaudited| Audited|
| | | | | | | |
| | | | | as at| as at| as at|
| | | | | | | |
| | | | | 31 December | 31 December | 30 June|
| | | | | | | |
| | | | | 2007 | 2006 | 2007|
| | | | | | | |
| | | | | A$ | A$ | A$ |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Current assets | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Cash and cash equivalents | | | | | | 5,720,438|
| | | | | | | |
| | | | | 3,213,403| 9,856,883| |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Trade and other receivables | | | | 101,443| 15,255| 82,488|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Other | | | | 99,434| 329,204| 156,359|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Total current assets | | | | 3,414,280| 10,201,342| 5,959,285|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Non-current assets | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Other financial assets | | | | 11,836| -| 11,176|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Plant and equipment | | | | 237,584| 9,389| 247,632|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Goodwill | | | 4| -| 20,284,774| 2,100,000|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Intangible assets | | | 5| -| 5,101,742| 22,732,609|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Total non-current assets | | | | 249,420| 25,395,905| 25,091,417|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Total assets | | | | 3,663,700| 35,597,247| 31,050,702|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Current liabilities | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Trade and other payables | | | | 482,421| 1,159,732| 1,248,147|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Other financial liabilities | | | 6| 890,801| -| 821,439|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Provisions | | | | 46,123| 76,167| 39,828|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Total current liabilities | | | | 1,419,345| 1,235,899| 2,109,414|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Non-current liabilities | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Interest bearing liabilities | | | | 22,242| 2,264,348| 46,762|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Total non-current liabilities | | | | 22,242| 2,264,348| 46,762|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Total liabilities | | | | 1,441,587| 3,500,247| 2,156,176|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Net assets | | | | 2,222,113| 32,097,000| 28,894,526|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Equity | | | | | | |
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Issued capital | | | 7| 57,842,753| 57,984,433| 57,842,753|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Other reserve | | | | -| -| -|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Accumulated losses | | | 7| (55,620,640)| (25,887,433)| (28,948,227)|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
|Total equity | | | | 2,222,113| 32,097,000| 28,894,526|
+--------------------------------+--+-----+-----+-------------+-------------+-------------+
| |
+-----------------------------------------------------------------------------------------+
+-----------------------------------------------------------------------------------------+
|Cash flow Statement |
| |
+---------------------------------+---+--+--------+-------------+-------------------------+
| | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
| | | | |Note | Unaudited| Unaudited| Audited|
| | | | | | | | |
| | | | | | 6 months to| 6 months to| 12 months|
| | | | | | | | to|
| | | | | | 31 December| 31 December| |
| | | | | | | | 30 June|
| | | | | | 2007| 2006| |
| | | | | | | | 2007|
| | | | | | A$| A$| |
| | | | | | | | A$ |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Cash flows from operating | | | | | | | |
|activities | | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Receipts from customers | | | | | 121,771| -| 123,683|
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Payments to suppliers and | | | | | (2,663,472)| (1,717,413)|(3,810,493)|
|employees | | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Interest and other costs of | | | | | -| (41,582)| (175,002)|
|finance paid | | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Net cash used in operating activities| | | 8| (2,541,701)| (1,758,995)|(3,861,812)|
+----------------------------------+--+--+--+-----+-------------+-------------+-----------+
| | | | | | | | |
+----------------------------------+--+--+--+-----+-------------+-------------+-----------+
|Cash flows from investing | | | | | | | |
|activities | | | | | | | |
+----------------------------------+--+--+--+-----+-------------+-------------+-----------+
|Interest received | | | | | 95,057| 32,537| 207,030|
+----------------------------------+--+--+--+-----+-------------+-------------+-----------+
|Payment for plant and equipment | | | | | (12,467)| (1,963)| (256,556)|
+----------------------------------+--+--+--+-----+-------------+-------------+-----------+
|Payment for intangible assets | | | | | (47,924)| (82,715)| (109,165)|
+----------------------------------+--+--+--+-----+-------------+-------------+-----------+
|Payment for businesses | | | | -| (5,182,554)|(5,242,599)|
+-------------------------------------+--+--+-----+-------------+-------------+-----------+
|Purchase of other financial assets | | | | -| -| (11,176)|
+-------------------------------------+--+--+-----+-------------+-------------+-----------+
|Net cash used in investing activities| | | | 34,666| (5,234,695)|(5,412,466)|
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
| | | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Cash flows from financing | | | | | | | |
|activities | | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Repayment of loan funds from | | | | | -| (1,223,793)|(1,223,793)|
|holding company | | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Loan funds from related party | | | | | -| 1,567,946| -|
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Payment for share issue costs | | | | | -| (537,330)| (537,330)|
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Proceeds from issue of shares | | | | | -| 16,805,945| 16,805,945|
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Net cash provided by/(used in) | | | | -| 16,612,768| 15,044,822|
|financing activities | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
| | | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Net increase/(decrease) in cash | | | | | (2,507,035)| 9,619,078| 5,770,544|
|and cash equivalents | | | | | | | |
+---------------------------------+---+--+--+-----+-------------+-------------+-----------+
|Cash and cash equivalents at the beginning | | 5,720,438| 237,805| 237,805|
|of the period | | | | |
+-------------------------------------------+-----+-------------+-------------+-----------+
|Effects of exchange rate changes on the | | -| -| (287,911)|
|balance of cash held in foreign currencies | | | | |
+-------------------------------------------+-----+-------------+-------------+-----------+
|Cash and cash equivalents at the end of the| | 3,213,403| 9,856,883| 5,720,438|
|period | | | | |
+-------------------------------------------+-----+-------------+-------------+-----------+
| |
+---------------------------------++--+--+--+-----+-------------+-------------+-----------+
+---------------------------------++--+--+--+-----+-------------+-------------+-----------+
NOTES TO THE FINANCIAL INFORMATION
1 Basis of preparation
The results for the half-year are unaudited. The financial information in this
interim statement does not constitute the statutory financial statements within
the meaning of section 240 of the Companies Act 1985.
The financial information in this announcement has been prepared on the basis of
Australian IFRS and the accounting policies as set out in the most recently
published set of annual financial statements. The interim results and prior year
comparative results have been prepared using accounting policies consistent with
those adopted in the audited financial statements for the year to 30 June 2007.
This includes prior year comparatives for the 6 months to 31 December 2006.
The financial information for the year ended 30 June 2007, has been extracted
from the audited financial statements for the year ended 30 June 2007. The
auditor's report on those accounts was unqualified.
This interim statement was approved by the board of Norwood Immunology Limited
on 31 March 2008.
This interim statement of unaudited results for the 6 months ended 31 December
2007 is, from today 31 March 2008, available on the Company's website
www.norwoodimmunology.com.
2 Going concern
The Group is an emerging pharmaceutical business and as such expects to be cash
absorbing until its technologies are commercialised.
As at 31 December 2007 the Group had an accumulated loss of A$55,620,640
(approximately �24.4 million) and for the six months ended 31 December 2007 the
Group incurred a net loss of A$26,672,413 (approximately �11.7 million) and
experienced negative cash flows from operations of A$2,507,035 (approximately
�1.1 million). As at 31 December 2007, current assets exceed current liabilities
by A$1,994,935 (approximately �0.9 million).
As the Group does not have sufficient cash resources to fund its current level
of activities for the next 12 months, the Directors have carefully assessed the
uncertainties relating to the likelihood of securing additional funding and the
Group's ability to effectively manage its cash flows.
Whilst there are uncertainties as to the exact timing and form of additional
fund raising necessary to fund the current level of activities of the Group for
at least the next 12 months, the Directors have formed a judgement at the time
of preparing the interim financial statements that there is a reasonable
expectation that the Group can raise additional cash resources during the next
12 months. As such, these financial statements have therefore been prepared on a
going concern basis which contemplates the continuity of normal business
activities and the realisation of assets and settlement of liabilities in the
ordinary course of business.
To continue as a going concern the Group will require the continued support of
current or new shareholders and/or to raise new facilities or equity from other
parties or from a sale or out-license of technologies or merger and acquisition
opportunities.
The directors believe the going concern basis of preparation to be appropriate
given that during its lifetime the Group has been able to attract funds in the
form of either equity capital or partnering to advance development programs and
provide sufficient funding to allow the Group to pay its debts as and when they
become due and payable.
In the event that the Group is unable to raise sufficient funds as set out
above, there is uncertainty whether the Group can continue as a going concern.
If the Group is unable to continue as a going concern, it may be required to
realise its assets and extinguish its liabilities other than in the normal
course of business and at amounts different to those stated in the financial
statements.
3 Basic and diluted loss per ordinary share
The calculations of earnings per share are based on the following losses and
numbers of shares.
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2007 2006 2007
A$ A$ A$
Loss for the financial period (26,672,413) (1,802,973) (4,863,767)
Weighted average number of shares: No. No. No.
For basic earnings per share 228,241,387 143,182,669 185,362,472
Exercise of share options - - -
For diluted earnings per share 228,241,387 143,182,669 185,362,472
EPS has been prepared using Australian IFRS results but consistent with UK GAAP
under FRS 14, presentation of diluted EPS is required when a company could be
called upon to issue shares that would decrease net profit or increase net loss
per share. The loss and weighted average number of ordinary shares for the
purpose of calculating the diluted earnings per ordinary share are identical to
those used for the basic earnings per ordinary share, as the exercise of share
options would have the effect of reducing the loss per ordinary share and is
therefore not dilutive.
4 Goodwill
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2007 2006 2007
A$ A$ A$
Net book value:
Balance at beginning of financial 2,100,000 - -
period
Goodwill recognized from business - 20,284,774 2,100,000
combinations occurring during the
period
Impairment (2,100,000) - -
Balance at end of financial period - 20,284,774 2,100,000
The acquisition of Virosome Biologicals as at 31 December 2006 was provisionally
accounted for based on the best information available at that time. Once the
value of the identifiable intangibles had been determined fair values were
assigned to the assets and liabilities acquired. These were included as at 30
June 2007 and the majority of the goodwill accounted for as in-process R&D.
The Directors have now re-assessed the carrying values of the goodwill from the
acquisition of Virosome Biologicals. The current cash position of the Group
creates uncertainty as to whether there will adequate financial resources in the
long term to complete the development of the Virosome Biologicals technologies
and to create future economic benefits. The Directors therefore believe that a
prudent application of Australian IFRS leads to an impairment to the carrying
value goodwill.
5 Other intangible assets
In-process
R&D Patents Total
A$ A$ A$
Gross carrying value
Balance at 1 July 2006 i. - 5,032,615 5,032,615
Additions from internal developments ii. - 109,165 109,165
Net revaluation increments/ iii. - - -
(decrements)
Increase through business iv. 18,258,031 - 18,258,031
combinations
Balance at 30 June 2007 v. 18,258,031 5,141,780 23,399,811
Additions from internal developments vi. - 47,924 47,924
Net revaluation increments/ vii. - - -
(decrements)
Increase through business viii. - - -
combinations
Balance at 31 December 2007 ix. 18,258,031 5,189,704 23,447,735
In-process
R&D Patents Total
A$ A$ A$
Accumulated amortisation
Balance at 1 July 2006 - 24,192 24,192
Amortisation expense - 5,369 5,369
Impairment losses charged to profit - 637,641 637,641
Balance at 30 June 2007 - 667,202 667,202
Amortisation expense - - -
Impairment losses charged to profit 18,258,031 4,522,502 22,780,533
Balance at 31 December 2007 18,258,031 5,189,704 23,447,735
In-process
R&D Patents Total
A$ A$ A$
Net book value
As at 30 June 2007 18,258,031 4,474,578 22,732,609
As at 31 December 2007 - - -
The Directors have re-assessed the carrying values of intangible assets
comprising Norwood Immunology patents and in-process R&D. The current cash
position of the Group creates uncertainty as to whether there will be adequate
financial resources in the long term to complete the development of the Norwood
Immunology and Virosome Biologicals technologies and to create future economic
benefits. The Directors therefore believe that a prudent application of
Australian IFRS leads to an impairment to the carrying value of IP and
in-process R&D.
This is not a negative reflection on the potential of underlying technologies
and the Directors continue to believe that there is still potential for
successful development of the in-process R&D and patents and still expect the
recovery of a future economic benefit from its ultimate commercialization.
However, they recognise that given the financial uncertainties it would be
imprudent to continue to carry these assets on the balance sheet.
6 Current interest bearing liabilities
31 December 31 December 30 June
2007 2006 2007
A$ A$ A$
Unsecured:
Deferred consideration 890,801 - 821,439
890,801 - 821,439
On 27 November 2006 the Group completed the acquisition of all of the issued
shares of Bestewil. As part of the consideration for the acquisition a payment
of Euro0.5 million (A$838,082) is deferred until 27 May 2008, the balance above
includes accrued interest payable on the deferred amount at 6% per annum.
7 Statement of Changes in Equity
+-----------------------+------------------------------------+--+-----------------------------------+
| |For the 6 months to 31 December 2007| | For the 12 months to 30 June 2007 |
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
| | Issued| Accumulated| Total A$| | Issued| Accumulated| Total A$|
| | | losses A$| | | | losses A$| |
| | capital| | | | capital| | |
| | | | | | | | |
| | A$| | | | A$| | |
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
| | | | | | | | |
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
|Opening balance |57,842,753|(28,948,227)| 28,894,526| |27,227,179|(24,084,460)| 3,142,719|
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
|Loss for the period | -|(26,672,413)|(26,672,413)| | -| (4,863,767)|(4,863,767)|
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
|Total recognized income| | | 2,222,113| | | |(1,721,048)|
|/(expense) | | | | | | | |
| |57,842,753|(55,620,640)| | |27,227,179|(28,948,227)| |
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
| | | | | | | | |
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
|Issue of shares | -| -| -| |31,152,904| -| 31,152,904|
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
|Share issue costs | -| -| -| | (537,330)| -| (537,330)|
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
|Closing balance |57,842,753|(55,620,640)| 2,222,113| |57,842,753|(28,948,227)| 28,894,526|
+-----------------------+----------+------------+------------+--+----------+------------+-----------+
Issued capital No.
Number at 1 July 2007 228,241,387
Shares issued during period -
Number at 31 December 2007 228,241,387
Fully paid ordinary shares carry one vote per share and carry the
right to dividends.
8 Reconciliation of loss from ordinary activities after related
income tax to net cash flows from operating activities
+---------------------------------------+--+-------------+-----------+-----------+
| | | Unaudited| Unaudited| Audited|
| | | | | |
| | | 31 December |31 December| 30 June|
| | | | | |
| | | 2007 | 2006 | 2007|
| | | | | |
| | | A$ | A$ | A$ |
+---------------------------------------+--+-------------+-----------+-----------+
|Loss from ordinary activities after | | (26,672,413)|(1,802,973)| |
|related income tax | | | | |
| | | | |(4,863,767)|
+---------------------------------------+--+-------------+-----------+-----------+
|Depreciation | | 30,085| 4,333| 24,442|
+---------------------------------------+--+-------------+-----------+-----------+
|Net unrealised foreign exchange loss/ | | (8,064)| - | 245,827|
|(gain) | | | | |
+---------------------------------------+--+-------------+-----------+-----------+
|Interest received | | (95,057)| (32,537)| (207,030)|
+---------------------------------------+--+-------------+-----------+-----------+
|Non-cash interest | | 23,891| -| 27,789|
+---------------------------------------+--+-------------+-----------+-----------+
|Impairment of non-current asset | | 24,880,533| -| 637,641|
+---------------------------------------+--+-------------+-----------+-----------+
|Decrease/(increase) in current | | (18,955)| 6,487| (60,746)|
|receivables | | | | |
+---------------------------------------+--+-------------+-----------+-----------+
|Decrease/(increase) in current | | 56,925| 4,853| 177,698|
|prepayments | | | | |
+---------------------------------------+--+-------------+-----------+-----------+
|Increase/(decrease) in current payables| | (720,420)| 61,435| 146,504|
+---------------------------------------+--+-------------+-----------+-----------+
|(Decrease)/increase in provisions | | (18,226)| (593)| 9,830|
+---------------------------------------+--+-------------+-----------+-----------+
|Net cash used in operating activities | | (2,541,701)|(1,758,995)|(3,861,812)|
+---------------------------------------+--+-------------+-----------+-----------+
9 Events after the balance sheet date
There has not been any other matter or circumstance, other than that referred to
in the financial statements or notes thereto, that has arisen since the end of
the financial period, that has significantly affected, or may significantly
affect, the operation of the Group, the results of those operations, or the
state of affairs of the Group in the future financial periods.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEWFMASASEDD
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